Prime to reach over half of American households
Amazon (AMZN) looks to be on track to reach a market penetration milestone with its Prime membership program this year. According to eMarketer predictions, Prime uptake will reach 51.3% of American households at the end of 2019, which is about 63.9 million households. As of 2017, 42.4% of American households had Prime subscriptions, which rose to 47.4% in 2018. So half of the households in the United States could have Prime subscriptions this year. Uptake of Prime is expected to continue, and 56.9% of American households are expected to be Prime subscribers by the end of 2021.
Prime program is big deal for Amazon
For Amazon, Prime’s deepening penetration in the United States is a big deal. Prime generates money for Amazon in several ways. First, Prime subscribers are very loyal Amazon retail customers and spend significantly more than regular customers on Amazon marketplace purchases. In addition, Amazon collects $119 in subscription fees from Prime subscribers every year. In the fourth quarter, which ended in December, Amazon generated $4.0 billion in subscription revenue, mostly from Prime membership fee collections.
In the tight competition for customers, eBay (EBAY) created its competition to Amazon Prime called eBay Plus, which it has launched in Germany and Australia. Traditional retailers Walmart (WMT), Target (TGT), and Kroger (KR) have also come up with perks that mimic the Amazon Prime program in some ways for their customers.